Laurie Hunsicker

Laurie Hunsicker inquired about the new C&I group, asking for the number of team members, their collective prior year performance, their previous institution, and their geographic focus. She also sought clarification on the Q1 expense increase relative to the Charitable Foundation charge and the expected 2026 charge. Additionally, she asked about future branching plans beyond Pawtucket, the details of a $6 million office classified loan, and the bank's stance on revisiting share buybacks given strong capital ratios and remaining authorization.

Answer

Ned Handy, Chairman and CEO, stated the C&I team consists of 4 people, previously from Brookline, with a Northeast regional focus, and a treasury management specialist will be added. He noted they have high hopes but need more time to build the pipeline. Ron Ohsberg, EVP and CFO, confirmed the 6% Q1 expense increase nets out the Charitable Foundation charge and penciled in $750,000 for the 2026 charge. Ned Handy mentioned Pawtucket is the only new branch for 2026, but future years might see one or two investments annually, potentially with alternative delivery models. Bill Wray, EVP and Chief Risk Officer, described the $6 million office classified loan as maturing in 2031, with strong sponsors, mid-40% occupancy, and current status, expecting a slow nursing process. Ned Handy reiterated that buybacks are always under consideration, but capital deployment is weighed against other needs, and confirmed 582,000 shares remain authorized.

Laurie Hunsicker of Seaport Research Partners sought details on the new C&I institutional banking team, including its size, prior performance, geographic focus, and previous employer. She also inquired about the 2026 outlook for the Washington Trust Charitable Foundation charge, future branching plans beyond Pawtucket, specifics on a $6 million office classified loan, and whether the bank would revisit share buybacks given strong capital ratios.

Answer

Chairman and CEO Ned Handy and EVP and Chief Risk Officer Bill Wray confirmed the C&I team consists of 4 people, came from Brookline, and focuses on the Northeast region, not just Greater Boston. Senior EVP and CFO Ron Ohsberg clarified the 6% Q1 expense increase excludes the charitable foundation charge and guided to $750,000 for the 2026 charge. Ned Handy stated Pawtucket is the only new branch for 2026, with future plans for continued retail footprint investment, potentially including alternative delivery. Bill Wray detailed the $6 million office classified loan, maturing in 2031, with strong sponsors, mid-40% occupancy, and current status. Ned Handy addressed buybacks by stating they are continuously under consideration, confirming 582,000 shares remain authorized out of 850,000.

Laurie Hunsicker questioned the decision to pause share buybacks despite the stock trading below tangible book value and improved credit quality. She also sought a breakdown of shared national credits, confirmation of NDFI exposure, details on a Class A office property moved to special mention, clarification on one-time gains in other non-interest income, the outlook for FHLB advances, and the September spot margin.

Answer

Ron Ohsberg, SEVP, CFO, and Treasurer, explained the pause in buybacks is due to capital ratios being at the lower end of the range and the need to support future commercial lending growth, though he didn't rule out future repurchases. Bill Wray, SEVP and Chief Risk Officer, specified shared national credits are $90 million CRE and $84 million C&I, and confirmed no NDFI exposure. He detailed the $22 million Class A office property in Hartford suburb, noting tenant replacements and an imminent LOI, with maturity in October 2027. Ron Ohsberg confirmed a $250,000 miscellaneous gain in other income, stated FHLB advances would be paid down at maturity with strong deposit growth, and provided the September spot margin as 2.43%.

Laurie Hunsicker pressed Washington Trust on its decision to pause share buybacks, questioning the rationale given the stock's valuation and low commercial non-performers.

Answer

Ron Ohsberg, SEVP, CFO, and Treasurer, explained the pause is due to being at the lower end of capital ratios and the need to preserve capital for future growth, particularly with new commercial lending initiatives.

Laurie Hunsicker of Seaport Research Partners posed several detailed questions regarding the balance sheet and credit quality. She asked about the funding mix, specifically the shift to FHLB borrowings and the spot NIM for June. She also requested details on a new C&I non-performing loan, an update on a previously disclosed office credit, de novo branch plans, and the rationale for limited share buyback activity.

Answer

SEVP, CFO & Treasurer Ronald Ohsberg provided a June spot margin of $2.38 and explained the shift to FHLB borrowings was a cost-effective decision. SEVP & Chief Risk Officer William Wray detailed a new $11M non-performing exposure to a broadband contractor, for which 'appropriate specific reserves' are held. He also confirmed a previously troubled office property was sold. Regarding capital, Chairman & CEO Edward Handy and CFO Ronald Ohsberg stated that capital preservation is currently a higher priority than share buybacks, resulting in only 10,000 shares being repurchased.

Laurie Hunsicker sought details on several specific items, including the funding mix, the June spot NIM, de novo branch plans, and credit quality. She asked for specifics on a new $9.4 million C&I non-performer, the resolution of a Class B office loan, and the status of a related credit. Finally, she questioned the company's capital strategy regarding share buybacks.

Answer

SEVP, CFO & Treasurer Ronald Ohsberg provided a June spot NIM of 2.38% and explained the shift to FHLB funding was for cost-efficiency. He also confirmed one de novo branch is planned for mid-2026. SEVP & Chief Risk Officer William Wray detailed the new C&I non-performer as a broadband contractor with appropriate reserves, expecting partial resolution by year-end. Regarding capital, Chairman & CEO Edward Handy and CFO Ronald Ohsberg stated that despite a tempting stock price, capital preservation and operational focus are currently more prudent than significant buybacks.

Laurie Hunsicker of Seaport Research Partners questioned several items, including potential one-time Boli income, the shift to FHLB borrowings, de novo branch plans, details on a new C&I non-performing loan, updates on office and construction criticized assets, and the company's rationale for limited share buybacks.

Answer

SEVP, CFO & Treasurer Ronald Ohsberg confirmed no one-time items in Boli, provided a June spot NIM of $2.38, and stated one de novo branch is planned for mid-2026. SEVP & Chief Risk Officer William Wray detailed that the new C&I non-performer is an $11 million exposure to a broadband contractor with 'appropriate specific reserves.' He also noted positive momentum on a lab construction project, which is now 62% leased. Regarding buybacks, both Chairman & CEO Edward Handy and CFO Ronald Ohsberg stated that capital preservation is currently more prudent, confirming only 10,000 shares were repurchased.

Laurie Hunsicker of Seaport Research Partners posed detailed questions regarding the drivers of BOLI income, the funding mix between FHLB borrowings and brokered deposits, the status of non-performing loans, de novo branching plans, and the rationale behind the company's capital management and share buyback strategy.

Answer

SEVP & CFO Ronald Ohsberg confirmed BOLI income had no one-time items, the June spot NIM was $2.38, and FHLB borrowings are currently more economical than brokered CDs. He also noted one de novo branch is planned for mid-2026. SEVP & Chief Risk Officer William Wray provided details on a new $11M C&I non-performing exposure to a broadband contractor, for which he stated the bank has 'appropriate specific reserves.' He also updated that a previously discussed lab construction project is now 62% leased. Regarding capital, Mr. Ohsberg and Chairman & CEO Edward Handy explained that despite the stock price, they are prioritizing capital preservation and growth over significant buybacks at this time, having repurchased only 10,000 shares.

Laurie Hunsicker of Seaport Research Partners posed several detailed questions regarding Boli income, the wholesale funding mix, the June spot NIM, expense timing from a sale-leaseback, de novo branch plans, credit quality specifics on non-performing loans, and the rationale for share buyback activity.

Answer

SEVP, CFO & Treasurer Ronald Ohsberg confirmed no one-time items in Boli, provided a June spot margin of $2.38, and stated that FHLB borrowings are currently more economical than brokered CDs. He also noted one de novo branch is planned for mid-2026. SEVP & Chief Risk Officer William Wray provided details on credit, including a new $11M C&I non-performer related to a broadband contractor, for which the bank has 'appropriate specific reserves.' He also updated on other credits, noting progress on a lab space lease-up. Regarding capital, Chairman & CEO Edward Handy and CFO Ronald Ohsberg explained that despite the stock price, the current priority is capital preservation and growth over significant buybacks, having repurchased only 10,000 shares.

Laurie Hunsicker of Seaport Research Partners questioned several financial details, including the nature of BOLI income, drivers of the net interest margin, the timing of sale-leaseback expenses, de novo branch plans, multifamily loan exposure, specifics on non-performing loans, and the rationale behind capital management decisions like share buybacks.

Answer

SEVP, CFO & Treasurer Ronald Ohsberg confirmed no one-time items in BOLI, provided a June spot NIM of 2.38%, and stated the sale-leaseback expense was fully reflected in Q2. He also noted one de novo branch is planned for mid-2026. SEVP & Chief Risk Officer William Wray provided details on credit, confirming no NYC rent-controlled exposure and discussing a new $11M C&I non-performer that is appropriately reserved. Regarding capital, Chairman & CEO Edward Handy and Mr. Ohsberg explained that despite the stock price, the current focus is on capital preservation over share repurchases.

Laurie Hunsicker sought clarification on Q4 expenses, specifically the $700,000 related to the core systems upgrade and the timing of the $4 million-$5 million in one-time costs for the upgrade. She also asked about the company's AI innovation team and associated spend, confirmation that EBTC one-time charges are complete, and inquired about the spot net interest margin. Additionally, she asked about non-recurring components within other income and sought details on the $9.9 million criticized office loan and the increase in office non-performers.

Answer

Mark Ruggiero, CFO and Head of Consumer Lending, confirmed the $700,000 for core systems upgrade consulting in Q4 and indicated the $4 million-$5 million in one-time costs would be spread throughout 2026, with the conversion scheduled for October. Jeffrey Tengel, President and CEO, explained their methodical approach to AI, focusing on a few key use cases with centralized governance, while Mark Ruggiero noted the initial spend involves three dedicated individuals. Mark Ruggiero confirmed EBTC one-time charges are finished and clarified that a $400,000 equity securities gain was the main non-recurring item in other income. He detailed the $9.9 million criticized office loan as a participated deal with a challenged valuation, and attributed the increase in office non-performers to one $18.1 million loan already reserved for.

Laurie Hunsicker sought clarification on expense items, including the core systems upgrade costs ($700k in Q4, $4-5M one-time for 2026) and the October conversion date. She also asked about AI innovation team spend, the completion of EBTC one-time charges, the December spot margin, and the non-recurring components of other income. Additionally, she inquired about specific office portfolio loans, including an $18.1 million classified loan and a $9.9 million criticized loan, and the increase in non-performing office loans.

Answer

CFO Mark Ruggiero confirmed the $700k consulting expense in Q4 for the core system upgrade, with $4-5M one-time costs spread over 2026, and the conversion scheduled for October. President and CEO Jeffrey Tengel explained the methodical approach to AI, focusing on governance and specific use cases rather than broad spending. Mark Ruggiero confirmed EBTC one-time charges are finished. He did not have the December spot margin readily available. He clarified that a $400k lift in Q4 other income was from equity securities, not unusual. Regarding office loans, he detailed the $18.1M classified loan (new to non-performing, reserved for $2M loss, expected to resolve in Q1 2026) and the $9.9M criticized participated deal (cash flowing, expected extension and resolution in 2026 without loss). The increase in non-performers was attributed to the single $18.1M loan.

Laurie Hunsicker sought confirmation on NDFI exposure, details on the $42.9 million of criticized office loans maturing in Q4 (including Enterprise Bank's contribution and resolution status), and an update on the $22 million Class A office non-performer. She also asked for the spot margin, clarification on loan accretion income volatility, and the remaining one-time charges, as well as a clean quarterly run rate for expenses.

Answer

Jeff Tengel, President and CEO, confirmed NDFI exposure is negligible. Mark Ruggiero, CFO and EVP, explained that the $42.9 million criticized office loans primarily consisted of two loans, with one $27 million relationship recently renewed and the other $16 million likely to be sold with minimal loss exposure. Ruggiero clarified that the $22 million Class A office non-performer would remain on non-accrual due to a payment-free period. He reported the September spot margin, excluding loan accretion, was 3.57%. Ruggiero noted that loan accretion income is lumpy, with an expected volatility between 10-13 basis points per quarter. He stated that approximately $8-10 million in one-time charges remain for Q4, completing the original $61 million estimate, and suggested a core expense run rate around $135 million per quarter post-merger.

Laurie Hunsicker of Seaport Research Partners asked a series of detailed questions covering specific non-performing loans, the increase in criticized office loans, net interest margin drivers, the accounting impacts of the Enterprise acquisition on tangible book value, and the company's M&A appetite.

Answer

CFO Mark Ruggiero provided specifics on several office loans, including a new $700k reserve on one property and constructive workouts on others. He also noted the June spot margin was 3.44% and detailed how potential CECL rule changes could impact tangible book value dilution. CEO Jeffrey Tengel stated that M&A is not a current priority, with focus remaining on the Enterprise integration and organic growth.

Laurie Hunsicker asked for the December spot margin, details on a $30 million non-accrual loan, the baseline for the 2025 expense guidance, and the drivers behind the linked-quarter increase in 'other' expenses.

Answer

CFO Mark Ruggiero provided the December core spot margin of 3.33% and confirmed the ~$404.7 million core noninterest expense figure is the correct baseline for 2025 guidance. Regarding the $30 million loan, Ruggiero and Executive Jeffrey Tengel noted no specific reserve has been taken, an appraisal is pending, and occupancy could return to ~80%. Ruggiero attributed the rise in 'other' expenses to unrealized securities losses, higher consulting fees, and outsized check fraud losses.

Laurie Hunsicker asked about the timing of the HarborOne investment portfolio repositioning, the December spot margin, and confirmation regarding the accretion impact on the margin and its inclusion in the 2026 guidance. She also sought clarification on the increase in non-performing loans (NPLs) from HarborOne and their reserve coverage, an update on NDFI exposure, and the accounting treatment for a $3.5 million lease impairment and a $700,000 loss on the sale of other assets. Finally, she inquired about the definitive stance on 'not pursuing acquisitions' and the strategy behind leaning into share buybacks.

Answer

CFO David Rosato confirmed the HarborOne investment portfolio repositioning occurred in early November, provided an adjusted December spot margin of 364 basis points, and affirmed that the margin guidance includes the projected accretion, while cautioning about quarterly variability. He confirmed $94 million in NPLs from HarborOne with 35% reserve coverage, expecting resolutions in the first half of 2026. CEO Denis Sheahan updated NDFI exposure to over $500 million, detailing its composition. CFO David Rosato clarified that the lease impairment and asset sale loss were one-time non-operating expenses. CEO Denis Sheahan and Executive Chair Bob Rivers emphasized a strong focus on organic growth, returning excess capital through share repurchases (aiming for a CET1 ratio of 12%), and a definitive commitment to not pursuing acquisitions.

Laurie Hunsicker inquired about the timing of the HarborOne investment portfolio repositioning and the spot margin for December. She also sought confirmation on the accretion impact from HarborOne on the margin and its inclusion in the guidance. Additionally, she asked for clarification on the increase in commercial non-performers from HarborOne, the timeline for their reduction, and an update on NDFI exposure. Finally, she asked about the location of a $3.5 million lease impairment on the financial statements, the nature of a drop in 'sale of other assets' loss, and the rationale behind the company's definitive stance against acquisitions.

Answer

CFO David Rosato stated the HarborOne investment portfolio repositioning occurred in the first couple of days of November and provided an adjusted spot margin of 364 for December, noting it's included in the guidance and will incrementally creep up. He confirmed the guide includes the accretion numbers from slide 18, cautioning on quarter-to-quarter variability, while CEO Denis Sheahan added there's an additional $9-$10 million accretion from former mergers. David Rosato confirmed $94 million of the commercial non-performers came from HarborOne with 35% reserved, expecting some resolutions in Q1 and Q2, similar to Cambridge Trust's NPL resolution. Denis Sheahan updated NDFI exposure to a little over $500 million, with Bob Rivers detailing its composition. David Rosato and Denis Sheahan clarified the $3.5 million lease impairment runs through the non-operating expense line and the 'sale of other assets' loss was a one-time event. Denis Sheahan and Bob Rivers reiterated their focus on organic growth, returning excess capital through buybacks, and managing the CET1 ratio towards 12%, emphasizing they are not pursuing acquisitions.

Laurie Hunsicker of Seaport Research Partners asked for the June spot margin, details on maturing criticized office loans, the expected impact of the proposed FASB ASU on the CECL 'double count' for the Harbor One deal, and the company's M&A appetite for markets like New Hampshire or Maine.

Answer

CFO David Rosato provided a normalized June spot margin of 3.55% and confirmed one criticized office loan is maturing in the next year, but no NPLs. He stated the FASB rule, if adopted, would apply only to the Harbor One deal, making it 1-1.5% less accretive. CEO Denis Sheahan reiterated that Eastern is already strong in New Hampshire and plans to grow there, but has no current strategic plans to expand into Maine.

Laurie Hunsicker asked for Webster Financial's spot margin at quarter-end and sought detailed breakdowns of the $6 billion NBFI portfolio (non-performing assets, charge-offs) and the $37 million in commercial net charge-offs by category (CNI, CRI, sponsors, office).

Answer

Neal Holland (CFO) reported the spot margin at quarter-end was 3.37%, down 3 basis points from the average. John Ciulla (CEO) clarified that NBFI is not solely within sponsor/specialty, with fund banking included in CNI. He stated there was no material deterioration in the sponsor book and that commercial charge-offs were granular across categories (office, CNI, ABL), with no single charge exceeding $10 million. He offered to provide more specific credit details offline.

Laurie Hunsicker from Seaport Research Partners asked for the average price of Q2 share buybacks and requested the debt service coverage and maturity details for the rent-regulated multifamily loan portfolio.

Answer

Senior EVP & CFO Neal Holland reported the Q2 share repurchases were made at an average price of $51.69. Chairman & CEO John Ciulla provided the portfolio's current debt service coverage ratio of 1.56x and stated that upcoming maturities are considered normal course of business.

Laurie Hunsicker inquired about the spot NIM for June, the size of the Boston Central Business District office portfolio, the status of deteriorating office loans, the cause of increased C&I non-performers, the quantitative impact of the new FASB ASU on the merger's tangible book value, and the post-merger dividend and capital return strategy.

Answer

Co-President and CFO Carl Carlson provided the June spot margin as 3.39% and stated the Boston office portfolio is $154 million. He explained the C&I non-performer increase was due to an $11 million fitness equipment credit. Regarding the FASB rule change, he noted it would eliminate a $71 million after-tax charge, significantly accelerating the tangible book value earn-back period. He also confirmed the post-merger dividend would be adjusted to be on par with Brookline's current rate, approximately $1.28 annually. Chairman & CEO Paul Perrault added that the deteriorating office loans are well-sponsored with slow lease-up.

Laurie Hunsicker of Seaport Research Partners asked for the spot net interest margin for June, details on the Boston office portfolio, the status of deteriorating office loans, the driver behind the increase in C&I non-performers, and the quantitative impact of the new FASB ASU rule on tangible book value, accretion, capital deployment, and the post-merger dividend.

Answer

Co-President and CFO Carl Carlson provided the June spot margin of 3.39% and stated the Boston office exposure is $154 million. He detailed that the FASB rule change would eliminate a ~$71 million after-tax charge, significantly improving capital and the deal's earn-back period, and confirmed they would be early adopters. He also identified an $11 million credit related to fitness equipment as the cause for the rise in C&I non-performers. Chairman & CEO Paul Perrault added that the deteriorating office loans are well-sponsored but leasing up slowly. Carlson confirmed the post-merger dividend would be adjusted to be on par with Brookline's current payout.

Laurie Hunsicker asked for the spot net interest margin for June, details on the Boston office loan portfolio, the reason for an increase in C&I non-performers, and the financial implications of the new FASB accounting rule on the upcoming merger.

Answer

Co-President and CFO Carl Carlson stated the June spot margin was 3.39% and that the Boston office portfolio totals $154 million. He explained the C&I non-performer increase was due to an $11 million fitness equipment credit. Critically, Carlson detailed that the FASB rule change would eliminate a $71 million after-tax charge, significantly reducing the merger's tangible book value dilution and accelerating the earn-back period from 2.9 years. He confirmed the company would be an early adopter and that the post-merger dividend target remains on track.

Laurie Hunsicker of Seaport Research Partners asked for specifics on credit, including the total reserve on the office loan book and office nonperformers. She also inquired about the composition of charge-offs, the runoff and reserve levels for the specialty vehicle portfolio, the 2025 tax rate outlook, and the spot net interest margin for December.

Answer

CFO Carl M. Carlson provided several key metrics: the general reserve on the office book is 2.23%, the specialty vehicle reserve is 2.6%, and the 2025 tax rate is projected at 24.25%. He also corrected an earlier statement, clarifying a large charge-off was a grocery loan, not laundry, and that specialty vehicle charge-offs were $1.1 million. He confirmed the specialty vehicle runoff is on track. Chairman and CEO Paul A. Perrault added that office nonperformers are minimal. Mr. Carlson reported the December spot margin was 3.10%.

Laurie Hunsicker of Seaport Research Partners inquired about Berkshire's net interest margin, credit quality, non-interest income, tax rate, and the pending merger with Brookline Bancorp. Specific questions covered the spot NIM for June, the timing of FHLB borrowing reductions, details on C&I non-performers, the Firestone portfolio's health, the presence of rent-controlled loans, the source of strong loan-related fees, the outlook for SBA loan gains, the normalized tax rate, and the potential impact of new CECL accounting rules on the merger's tangible book dilution and closing timeline.

Answer

EVP & CFO Brett Brbovic stated the June spot NIM was 3.22% and that FHLB borrowing reductions were gradual, tied to deposit growth. He also noted BOLI gains were $800,000 above normal and projected a normalized tax rate of 24-25%. On the merger, he explained the impact of the new accounting standard is still being analyzed. Senior EVP & Chief Risk Officer Gregory Lindenmuth addressed credit, attributing the C&I NPL increase to a few small credits and confirming no exposure to rent-controlled loans. President & COO Sean Gray added that the SBA loan gain outlook is between Q1 and Q2 levels. CEO Nitin Mhatre confirmed the merger closing is still expected in September, pending regulatory approval.

Laurie Hunsicker from Seaport Research Partners asked about Berkshire's net interest margin, credit quality, non-interest income, tax rate, and the pending merger with Brookline Bancorp. Specific questions focused on the June spot NIM, the rise in C&I non-performers, details on the Firestone portfolio, the impact of BOLI gains, the outlook for SBA loan sales, and the effect of new CECL accounting rules on the merger's tangible book dilution.

Answer

EVP & CFO Brett Brbovic provided a June spot NIM of 3.22%, noted BOLI gains were $800,000 above normal, and projected a normalized tax rate of 24-25%. He stated the impact of the new CECL ASU on the merger is still being analyzed. Senior EVP & Chief Risk Officer Gregory Lindenmuth attributed the C&I NPL increase to a handful of smaller credits and provided details on the Firestone portfolio. President & COO Sean Gray suggested the SBA gain on sale run rate would be between Q1 and Q2 levels. CEO Nitin Mhatre confirmed the merger closing is still expected in September, pending regulatory approval.

Laurie Hunsicker inquired about the components of the pre-tax credit card sale gain, requested more detail on the two large OREO property write-downs, specifically the King Carter property, and asked for guidance on the effective tax rate for 2016.

Answer

CFO Rob Gorman and CEO Bill Beale clarified the $1.2 million net benefit from the credit card sale included a gain in other income, a reduction in provision from releasing reserves, and offsetting contract termination expenses. CEO Bill Beale explained the OREO write-downs on the King Carter and King William County properties were due to a change in valuation methodology to a discounted absorption model, reducing lot values to around $11,000. CFO Rob Gorman advised that a 26% effective tax rate is a good assumption for 2016.